Introduction As the world’s largest Southeastern Asian economy with a population of over 200 million, Indonesia possesses attractive prospects for business and enterprise. Alongside the election of President Widodo who intends to increase foreign investment and improve infrastructure, this could serve as an opportune time to get involved with the island nation. As the world becomes increasingly globalized, the propensity to manage internationally becomes imminent. This guide is intended to benefit the international manager in conducting operations in Indonesia. Its purpose is to provide the manager with a comprehensive background regarding cultural practices, as well as an interpretive lens and recommendations for best practice. Indonesia …show more content…
The mining, manufacturing, and agricultural sectors are the bread-winners for Indonesia. In 2010, United States President, Barack Obama visited Indonesia and commented that Indonesia is an example of how a developing nation should embrace cultural diversity and democracy. In 2014 Indonesia’s new President, Joko Widodo, planned to end government corruption and improve the economic reform. Indonesia currently struggles with extreme poverty, inadequate infrastructure for the rapidly growing nation, and economic and social reform issues. It has implemented a 20 year development social and infrastructure revision plan beginning in 2005 and projected to end in 2025. The Land Indonesia is the world’s largest archipelago and is the fourth most populous island in the world. There are a total of 17,508 islands and nearly 6,000 islands remain uninhabited. It is nearly three times the size of Texas. The U.S. is five times the size of Indonesia. There are five large islands that include: Java, Sumatera, Papau, Kalimantan, and Sulawesi. Although, Bali and Komodo islands are more well known to tourists. The country can be observed in two parts: Western and Eastern. The western side is where over 80 percent of Indonesia’s total GDP is obtained and the western side is located near Malaysia and Singapore. The eastern side is more remote and less densely populated. Indonesia’s natural resources include: silver and
According to AAFC (Agriculture and Agri-Food Canada, 2010) due to its extensive natural resources and geographical location, in the way of several of the world’s most important trading routes, Indonesia represents the Southeast Asia’s largest economy. On a global perspective, Indonesia is the fourth most populated country and has the largest Muslim population, besides being the world’s largest archipelago, with around 17,000 islands. The country’s GDP (Gross Domestic Product) is also showing considerable and stable growth throughout the years and unemployment rates dropped considerably (AAFC, 2011).
Indonesia today has rebuilt its financial stability and has tried to reorganize its fiscal policies since the global Asian monetary crisis. Even though the problems which rise from monetary crisis remain (such as unemployment), the condition of economic development in Indonesia is positively growing up. The total GDP (purchasing power equality) in Indonesia is $827, 4 billions (estimated in 2004) and the GPD per capita is $3,500. These numbers show a good progress sign for standard of developing countries.
“In 1998 20% of the Indonesian population were below the poverty line. In 1999, 28% of the population was below the poverty line. Then in 2000, 22% of the population was below the poverty line” (Rukmana).
Indonesia has a high rate of political risk because of the corruption, weak judicial system, and fragile infrastructure. Indonesia has several issues that conflict with promoting foreign investments including: a poor government performance, low wages, and a conflicting religious concerns. Indonesia is making changes to its government regulations and restrictions, and increasing funding for infrastructure. Religious concerns are more difficult combat because the majority of the population is Muslim (nearly 88%), although most of the community is supportive and open to democratic values. There is only a very small portion that are radicals and engage in violent behavior and terrorist acts.
World Justice Project (2015) then raised three contributing factors for the shortcoming of law in Indonesia, namely ‘defective investigations, an ineffective correctional system, and violations to due process of law’. The World Economic Forum (WEF)'s Global Competitiveness Report 2016-2017 stated that the most troublesome factors for conducting business in Indonesia were corruption and inefficiency in the bureaucracy of Indonesia.
Indonesia can best be described as a powerful emerging market. Indonesia has managed to relinquish its former status as a third world country and make a name for itself in the world market. Currently, it is the third largest populated country in Asia with 254.5 million, right behind China and India respectively.5 It has the sixteenth largest economy as of 2014 based off
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According to James M. Henslin, as of 2008, Indonesia is considered one of the least industrializing nations. Least industrializing nations account for 68 percent of the world’s people but only 49 percent of the earth’s land. These nations usually are filled with poverty. People that live in these nations have no running water, indoor plumbing, or access to teachers or doctors. The more the population grows the more stress it causes and gives them setbacks (p. 247, 249). Industries in Indonesia consist of agro-business, resource extraction and export, construction, and tourism. As of the 1970s, industrial sectors have been developed, commonly in Java around Jakarta and Surabaya and other cities along the north coast. In the outer islands is where agro-business and resource extraction is located. Much of Indonesia’s foreign exchange and domestic operating funds are supplied by these industries. Sumatra has plantations, oil, gas, and mines; West Papua has mining; and Kalimantan has timber.
In addition to their Joint Understanding, Australia’s Overview of Aid Program to Indonesia has provided support to Indonesian laws and justice by helping develop robust legal and justice systems, well-run elections and an active civil society. Australia is also assisting the Indonesian government to strengthen its ability to formulate and implement economic and budgetary policy and is working to support Indonesia’s decentralization efforts by helping local governments improve the way they deliver basic services such as education, health, water and sanitation (Overview of Australia 's Aid Program to Indonesia, 2015). Even more, after being elected in October 2014, Indonesia’s President Joko Widodo promised a clean and professional government by cleaning up the corruption and to
From being ruled by an authoritative government, Indonesia now has become a model for democracy in Asia. Over the years, Indonesia has slowly made the transition to democracy. Its new presidential election is clear evidence of this transition because the Indonesians chose to elect a common man to be the president: an official who they thought would understand their struggles. Within 15 years, Indonesia has transitioned from a bureaucratic-authoritarian regime to a formal presidentialism. The newly elected president has already taken steps toward implementing his reforms which consists of pushing to cut down fuel subsidies, getting rid of corruption and encouraging new businesses to invest in Indonesia by giving them tax incentives. These are clear signs that consolidated liberal democracy in Indonesia has already taken place and that Indonesia will continue to be a democratic country in the future.
This paper examines the economic environment of doing business in Indonesia. It takes into account several dimensions such as political, legal, economics, social and technology factors. However, economics and political factors are covered in depth as they have a greater impact on establishing advantages and challenges when a firm might decide to set up a business in Indonesia. The results show that not only legal origins have an impact on corporate finance, ownership and structure, but also politics. The poor quality of the judiciary and legal system and the bureaucracy is much more a legacy of the Soeharto government than of the Dutch colonial system (and French civil law). From the analysis of
Education: If a country has good literacy rate then it has bright future. Same thing apply on Indonesia. 90.4% of its populations are literate in which male are 94% and female are 86.8%. 3.6% of their GDP is spent on education.
Indonesian Economy has seen drastic changes in the last two decades. Currently Indonesia is South East Asia’s largest economy and one of the emerging economies in the world. Indonesia is ranked the 18th largest economy in the world. Looking at the history, the Indonesian economy was deteriorating and was in crisis in the
Indonesia’s stocks have been sought by foreign investors due to their attractive returns, particularly after the announcement of GDP growth by the Indonesian government and the implementation of the
Following independence, Sukarno took over Indonesia in 1957 and implemented a closed economic policy that rejected foreign capital and focused on creating a greater role for government nationalism (Dieleman, 2006). Although Sukarno’s policies attempted to favor indigenous businessmen with his Benteng program, Sudono and Indonesia’s Chinese minority economically